GROSS DOMESTIC PRODUCT: SECOND QUARTER 2009 (THIRD ESTIMATE)
CORPORATE PROFITS: SECOND QUARTER 2009 (REVISED ESTIMATE)
Real gross domestic product -- the output of goods and services produced by labor and property
located in the United States -- decreased at an annual rate of 0.7 percent in the second quarter of 2009,
(that is, from the first quarter to the second quarter), according to the "third" estimate released by the
Bureau of Economic Analysis. In the first quarter, real GDP decreased 6.4 percent.
The GDP estimate released today is based on more complete source data than were available for
the "second" estimate issued last month. In the second estimate, the decrease in real GDP was 1.0
percent (see "Revisions" on page 3).
The decrease in real GDP in the second quarter primarily reflected negative contributions from
private inventory investment, nonresidential fixed investment, residential fixed investment, personal
consumption expenditures (PCE), and exports that were partly offset by positive contributions from
federal government spending and state and local government spending. Imports, which are a subtraction
in the calculation of GDP, decreased.
The much smaller decrease in real GDP in the second quarter than in the first primarily reflected
much smaller decreases in nonresidential fixed investment and in exports, an upturn in federal
government spending, a smaller decrease in private inventory investment, an upturn in state and local
government spending, and a smaller decrease in residential fixed investment that were partly offset by a
much smaller decrease in imports and a downturn in PCE.
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FOOTNOTE.--Quarterly estimates are expressed at seasonally adjusted annual rates, unless otherwise
specified. Quarter-to-quarter dollar changes are differences between these published estimates. Percent
changes are calculated from unrounded data and are annualized. Real estimates are in chained (2005)
dollars. Price indexes are chain-type measures.
This news release is available on BEAs Web site along with the Technical Note and Highlights
related to this release.
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Motor vehicle output added 0.19 percentage point to the second-quarter change in real GDP after
subtracting 1.69 percentage points from the first-quarter change. Final sales of computers subtracted
0.04 percentage point from the second-quarter change in real GDP after adding 0.06 percentage point to
the first-quarter change.
The price index for gross domestic purchases, which measures prices paid by U.S. residents,
increased 0.5 percent in the second quarter, the same increase as in the second estimate; this index
decreased 1.4 percent in the first quarter. Excluding food and energy prices, the price index for gross
domestic purchases increased 0.8 percent in the second quarter, compared with an increase of 0.2
percent in the first.
Real personal consumption expenditures decreased 0.9 percent in the second quarter, in contrast
to an increase of 0.6 percent in the first. Real nonresidential fixed investment decreased 9.6 percent,
compared with a decrease of 39.2 percent. Nonresidential structures decreased 17.3 percent, compared
with a decrease of 43.6 percent. Equipment and software decreased 4.9 percent, compared with a
decrease of 36.4 percent. Real residential fixed investment decreased 23.3 percent, compared with a
decrease of 38.2 percent.
Real exports of goods and services decreased 4.1 percent in the second quarter, compared with a
decrease of 29.9 percent in the first. Real imports of goods and services decreased 14.7 percent,
compared with a decrease of 36.4 percent.
Real federal government consumption expenditures and gross investment increased 11.4 percent
in the second quarter, in contrast to a decrease of 4.3 percent in the first. National defense increased
14.0 percent, in contrast to a decrease of 5.1 percent. Nondefense increased 6.1 percent, in contrast to a
decrease of 2.5 percent. Real state and local government consumption expenditures and gross
investment increased 3.9 percent, in contrast to a decrease of 1.5 percent.
The change in real private inventories subtracted 1.42 percentage points from the second-quarter
change in real GDP, after subtracting 2.36 percentage points from the first-quarter change. Private
businesses decreased inventories $160.2 billion in the second quarter, following a decrease of $113.9
billion in the first quarter and a decrease of $37.4 billion in the fourth.
Real final sales of domestic product -- GDP less change in private inventories -- increased 0.7
percent in the second quarter, in contrast to a decrease of 4.1 percent in the first.
Gross domestic purchases
Real gross domestic purchases -- purchases by U.S. residents of goods and services wherever
produced -- decreased 2.3 percent in the second quarter, compared with a decrease of 8.6 percent in the
first.
Gross national product
Real gross national product -- the goods and services produced by the labor and property
supplied by U.S. residents -- decreased 1.0 percent in the second quarter, compared with a decrease of
6.6 percent in the first. GNP includes, and GDP excludes, net receipts of income from the rest of the
world, which decreased $7.4 billion in the second quarter after decreasing $6.1 billion in the first; in the
second quarter, receipts decreased $8.4 billion, and payments decreased $1.0 billion.
Current-dollar GDP
Current-dollar GDP -- the market value of the nation's output of goods and services -- decreased
0.8 percent, or $26.8 billion, in the second quarter to a level of $14,151.2 billion. In the first quarter,
current-dollar GDP decreased 4.6 percent, or $169.3 billion.
Revisions
The third estimate of the second-quarter is 0.3 percentage point less of a decrease, or $9.0
billion higher, than the "second" estimate issued last month. The upward revision to real GDP primarily
reflected an upward revision to nonresidential fixed investment.
Advance Estimate Second Estimate Third Estimate
(Percent change from preceding quarter)
Real GDP................................. -1.0 -1.0 -0.7
Current-dollar GDP....................... -0.8 -1.0 -0.8
Gross domestic purchases price index..... 0.7 0.5 0.5
Corporate Profits
Profits from current production (corporate profits with inventory valuation and capital
consumption adjustments) increased $43.8 billion in the second quarter, compared with an increase of
$59.1 billion in the first quarter. Current-production cash flow (net cash flow with inventory valuation
adjustment) -- the internal funds available to corporations for investment -- decreased $30.5 billion in
the second quarter, in contrast to an increase of $16.2 billion in the first.
Taxes on corporate income increased $35.6 billion in the second quarter, compared with an
increase of $47.0 billion in the first. Profits after tax with inventory valuation and capital consumption
adjustments increased $8.2 billion in the second quarter, compared with an increase of $12.0 billion in
the first. Dividends decreased $62.1 billion, compared with a decrease of $51.8 billion; current-
production undistributed profits increased $70.3 billion, compared with an increase of $63.7 billion.
Domestic profits of financial corporations increased $28.5 billion in the second quarter, compared
with an increase of $115.9 billion in the first. Domestic profits of nonfinancial corporations increased
$29.8 billion in the second quarter, in contrast to a decrease of $40.2 billion in the first. In the second
quarter, real gross value added of nonfinancial corporations decreased, and profits per unit of real value
added increased. The increase in unit profits reflected decreases in unit labor and nonlabor costs that
more than offset a decrease in unit prices.
The rest-of-the-world component of profits decreased $14.6 billion in the second quarter,
compared with a decrease of $16.6 billion in the first. This measure is calculated as (1) receipts by U.S.
residents of earnings from their foreign affiliates plus dividends received by U.S. residents from
unaffiliated foreign corporations minus (2) payments by U.S. affiliates of earnings to their foreign
parents plus dividends paid by U.S. corporations to unaffiliated foreign residents. The second-quarter
decrease was accounted for by a larger increase in payments than in receipts.
Profits before tax with inventory valuation adjustment is the best available measure of industry
profits because estimates of the capital consumption adjustment by industry do not exist. This measure
reflects depreciation-accounting practices used for federal income tax returns. According to this
measure, domestic profits of both financial and nonfinancial corporations increased. The increase in
nonfinancial corporations reflected increases in retail trade, in manufacturing, and in information that
were partly offset by decreases in wholesale trade and in transportation and warehousing. Within
manufacturing, the largest increases were in motor vehicles, in other nondurable goods, and in
chemical products. The largest decrease was in petroleum and coal products.
Profits before tax increased $90.6 billion in the second quarter, compared with an increase of
$186.4 billion in the first. The before-tax measure of profits does not reflect, as does profits from
current production, the capital consumption and inventory valuation adjustments. These adjustments
convert depreciation of fixed assets and inventory withdrawals reported on a tax-return, historical-cost
basis to the current-cost measures used in the national income and product accounts. The capital
consumption adjustment increased $16.3 billion in the second quarter (from -$144.9 billion to -$128.6
billion), in contrast to a decrease of $69.3 billion in the first. The inventory valuation adjustment
decreased $63.0 billion (from $81.1 billion to $18.1 billion), compared with a decrease of $58.1 billion.
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BEAs national, international, regional, and industry estimates; the Survey of Current Business;
and BEA news releases are available without charge on BEAs Web site at www.bea.gov. By visiting
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Next release Thursday, October 29, 2009, at 8:30 A.M. EDT for:
Gross Domestic Product: Third Quarter 2009 (Advance Estimate)
